Chinese winery Weilong announces plans to sell bulk of its Australian vineyards
One of China’s largest wine producers is planning to sell some of its Australian vineyards, a year after the Asian nation imposed draconian tariffs on Australian wine imports.
Weilong Grape Co, China’s third biggest wine producer and largest organic winery , has revealed that it is to sell over 320 hectares of its vineyards in Australia for RMB 660.6 million (AU$143m), according to a company statement. The vineyards up for sale are in Coomealla and Nyah in Murray, which account for over three quarters (76%) of Weeilong’s total wine production in Australia, to “alleviate its financial and managerial stress for its Australian subsidiary”.
The Shandong-based Chinese wine producer bought the vineyards between 2016 and 2018 in what was described as Murray’s “biggest investment in a decade”, according to executive officer of Murray Valley Wine Growers, Mike Stone, speaking to ABC News.
Back then when relations between Australia and China were less strained, China was Australia’s biggest and most profitable export market, prompting a winery buying spree from Chinese investors, who accounted for up to 10% of Barossa VAlley vineyard sales up unitl 2020.
Riding on the back of this growth wave, Weilong snapped up about 600 hectares of vineyards in Victoria and New South Wales, and built a brand-new 26,000 tonne capacity winery just south of Mildura “with plans for future expansion”, it announced at the time.
The company's strategy was to ship Australia-made wines back to the vast Chinese market, with its winemaking facilities in Australia eventually having the capacity to crush 170,000 tones of grapes a year, reportedly raising AU$120 million for the Australian wine project. However, this all came to a grinding halt when China announced an anti-dumping investigation into Australian wines in August 2020, bringing to an end AU$1.2 billion Australian wine exports
This sale by Weilong comes only a year after China formally introduced up to 218% punitive tariffs on Australian wines that has decimated AU1.2bn of Australian wine exports to a mere AU$214m within a year. This is the first major sell off by a Chinese winery after the punitive tariffs have made it nigh on impossible to ship Australian wine back to China.
The sale includes 167.55 ha vineyards in Coomealla and 260.41 ha in Nyah and other associated assets, for AU$26.6m and AU$44.4m, respectively. With the sale, Weilong will still be left with some vineyards in Australia, claiming that the move is intended to relieve financial stress – if relations between China and Australia improve, it has supplies that can meet the company’s demand in the next two years. But with millions of litres of wines in storage and pressure from the new vintage harvest, many wines will be wasted and grapes will be left to rot on the vine.
Other Chinese owned Australian based wineries include Swan Vintage which was Australia’s third largest wine exporter to China behind Treasury Wine Estates and Casella Family Wines. Since 2021, it has pivoted away from selling its wines to China and Baijiu products as well as producing locally made Chinese wine in Ningxia.
Meanwhile, China’s largest winery Changyu Wine Pioneer owns Clare Valley-based winery Kilikanoon Wines which it bought for AU$20.6 million in 2017.